Frequently touted as the future of business technology, cloud computing's biggest benefit is that it makes enterprise-quality technology affordable for small businesses. It lets them compete at previously unattainable levels. In fact, it's now possible to completely run your small business in the cloud.

However, not everyone is on board with this idea. For every person extolling the benefits of cloud computing, there's an opponent with an equally powerful risk or disadvantage. With so many differing opinions, how can you possibly decide what to do? Let's take a look at the major pros and cons of cloud computing.

Cloud Computing: 3 Pros

1. Improved Disaster Recovery

Moving your business data to the cloud can make disaster recovery (DR)—i.e., retrieving data in the event of a hardware compromise—easier and less expensive. You can even set up your system to back up data automatically to ensure you'll be able to recover the most up-to-date information in case of emergency.

According to a study by SpiceWorks, and sponsored by Carbonite, 45 percent of SMBs have experienced data loss and, on average, it cost $9,000 to recover the data. You can minimize this cost by having a good DR plan in place before disaster strikes.

"Most SMBs aren't storing petabytes of data, and they need only a reasonable amount of reliability," says Brian Geisel, CEO of Geisel Software. "The [high] cost really comes in around how quickly your data can be recovered. For most situations, you can setup DR that will recover within a couple of hours for less than $1,000."

No matter how you do the math, $1,000 in disaster preparation is a lot cheaper than $9,000 to recover after an event.

2. Increased Collaboration and Flexibility

For many businesses, moving to the cloud increases opportunities for collaboration between employees. Colleagues can sync and work on documents or shared apps with ease, often simultaneously, receiving updates in real time.

Additionally, cloud computing allows each team member to work from anywhere. The cloud centralizes your data, which means that you, your employees, and even your clients can access your company data from any location with Internet access.

3. Environmentally Friendly

Cloud computing decreases a business' carbon footprint by reducing energy consumption and carbon emissions by more than 30 percent. For small companies, the decreased energy usage can reach 90 percent—a huge money saver. It can also help a business project an environmentally sound image.

Cloud Computing: 3 Cons

1. Internet Connectivity

Running all or some of your business applications in the cloud is great, as long as you can maintain a consistent Internet connection. If any one of your cloud-based service providers loses connectivity, or if your ISP experiences an outage, you're out of business until that Internet connection returns. Even the best servers go down occasionally, so if you decide to use this method, it's important to implement a backup plan.

2. Ongoing Costs

While cloud computing is relatively inexpensive to start up, depending on your needs, an in-house solution may cost less in the long run. Buying an in-house server and installing a network system is definitely a large, up-front capital investment, and you also need to consider ongoing IT maintenance costs.

With cloud computing, you pay the same amount each month to maintain not only your server, but also all your data. The choice you make may depend on whether you have a lot of startup capital to invest in a private network. Be sure to compare all the costs for supporting both an in-house server and cloud-based server to see which option works best for your situation.

3. Security

It boils down to whom do you trust with your business data? Not every business should place its data in the cloud. Companies with highly sensitive data—or that must meet stringent compliance regulations—may well need their own IT department to keep data secure. When you store data in the cloud, you're trusting a third party to keep it safe.

Does your small business have an IT department that's security savvy enough—with enough resources—to lock down your data? If so, you're set. If not, the cloud may well offer you more security than you could provide on your own.

One former Scotland Yard detective believes that you are ultimately the only entity that can fully control your data. Additionally, because the purported safety of cloud computing isn't standardized, you may have a difficult time determining how well third-parties protect your data.

Should you choose cloud computing or should you set up an in-house network? Both options have their pros and cons. Research your options both in and outside the cloud, and weigh them against the specific needs of your business.

Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.

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